This might be a nieve question - can you setup a retirement account via trade republic or any of these platforms? it feels like the pension account is hidden behind pre PAYE and is somewhat limited in options (i get that its great to have employer contributions and that it isnt taxed as much on entry. ) but if we could all have a second retirements account that allowed us more control and allows us invest with long term in mind on these platforms that would definitely be attractive. just a thought.
Thank for the video Malone, can I suggest topic for the new video. Pension and how to actually invest since I found it pretty interesting when I started my pension investing journey and I chose Davy Select where I can decide where I want to invest, it would be awesome if you do comparison of Davy, Zurich, Irish Life etc... how much it cost etc...
Hello! Thanks for the content, really helpful. The main thing that it's still stopping me from investing (apart from my corporate RSU and EPP) is the tax implications, especially taxes on interests and ETF. I think that a video with guidelines about how to handle the tax aspects would be very useful, maybe specifying when paying an accountant is the best option. Any link to a document, video or book would be great as well. Thanks again for all your amazing work.
Thanks for the video Malone from a foreign European expat living in Ireland. For us a diverse community is essential for our future know how the Irish system works. 👏👏👏👏
Thanks for the excellent video with so much detailed info. Would you make a video related to self administered pensions? Also, the best method to take funds from your Limited company i.e. employee salary, invoicing the company as a sole trader etc.?
Have to disagree with the maxing pension as the starting point. No point having tens or hundreds of thousands of euro locked into a pension until your at least 50 if you don’t have an emergency fund and are still living in your parents box room (and want your own place). Makes sense on a calculator/spreadsheet but not in real day to day life. Take advantage of employer contributions as a starting point for sure though. I’d also go with a mini-emergency fund then take on the high interest debt. Once it’s cleared go back finish off a fully funded emergency fund. Then stick it out of sight and not visible on your main banking app to reduce temptations. Most people don’t have any emergency fund so having anything puts you amongst the top of the class unfortunately. One scenario to invest in index funds before maxing out pension contributions would be for planned or known expenses in the medium term. 5/7+ years. No point in having a big pension pot but then needing to borrow in 10 years for a new car, kids college etc. Probably my main feedback on the video is you over looked protection polices, especially income protection. Everybody needs this if they don’t have it with an employer. Almost as important as this is life cover (not mortgage protection) if you have dependants and especially if you have kids and/or you have the only household income.
agree on pension investments being a good way to invest for the long term while saving on taxes. However, investment choices tend to be limited when it comes to pension plans. In most (perhaps all) cases I have found, they're limited to actively managed funds, which are much more expensive and as research has shown fail to beat the return from passively managed funds. And the AMC is quite high for pension plans at 1.5% or higher. These high fees compound to astronomical numbers after 20-30 years or more, which is a very common timeframe for lifetime investments. In comparison, investing post-tax in index funds offers choices with fees as low as 0.1% The ideal would be having the option to invest pre-tax in very low cost index funds. If anyone knows how this is possible, please let me know, I haven't been able to find any 🙏
Your want does not exist in Ireland. An employer pension investment options might well be limited but if so make HR aware and see if more options can be added. Fees are also normally lower on group schemes than personal pensions and again raise it with HR to see if your employers plan is competitive. Do the fees in an employer plan offset the 67% instant return made via tax relief? Some company pensions can have passive index funds and have fees as low as 0.10% it might just need some push from employees to get HR to take notice.
Sage advice Malone. Only one observation. If you intend to reach financial independence before the retirement age (i.e. 66), you'll need a decent private investment fund to fund the gap. In this case something like a 60/40 split (pension/private investment) would be a good balance.
Pension funds in ireland are not insured with the deposits guarantee scheme, although highly unlikely but if the likes of new ireland or zurich go bust u will lose every single penny. Thought that shiuld of been mentioned
Hi Dan. Thanks for the video. I am wondering about the exit tax on index funds. I have bought some index funds on trade republic and I have a recurring transaction for trading 212. Obviously the recurring one (which is monthly) would mean that in 8 years’ time, I will have to pay the exit tax every month, which seems like a bit of a pain. Can you provide me more details about this please?
Thanks. I do not understand why the emergency fund should not be "invested" partially or totally in an instant access saving account. For some of us especially with kids emergency funds is quite significant, it's essential to protect it against inflation.
@@MrBucko1990 can trade republic adjust the interest any time? Inflation is dropping in many countries in Europe, so i am not sure what will happen during the next 12 months. That's why I decided for BOI supersaver 3% fixed on 30k max, u can open up to 2 of them. Not great, not terrible, they pay dirt for you.
@@locusta1280 you should not put an emergency fund into fixed account unless you then tell when an emergency will happen? I would be more concerned about ensuring instant access for an emergency fund rather than the interest rate being earned. If that means it earns 0% so be it, the access is the key. Yes Trade Republic can adjust at any time but so can BOI or anyone else. Unless it’s a fixed term account but again an emergency fund shouldn’t be in a fixed term account. Anything in excess of an emergency fund is an altogether separate matter.
This is to do that all that 40% you dont pay in tax goes into your pension fund (and maybe employer adds/ or that pension fund gives you over time profit)
What about the situation where the only accepted pay method is a credit-card? In the Netherlands, ideal is the standard but for ordering from foreign countries i need either PayPal or a credit-card. On holidays, i use my credit-card as it has better conditions than using my Dutch debit card. Cash is king but when using my credit-card the conversion is better then the one offered on my debit card. I build my pension via my employer. In the Netherlands, we also get a government pension. I think it won't be available for me when it is my turn. That is the reason i started investing in my ETF's portfolio. I could do it with tax credits but as i want to have full control i do it without tax credits. With your net payment in, pay yourself first. I put 5% away to my saving account and 7.5% to my ETF's investment account.
Great video again Dan 👏 Thank you. 😊 Can i ask what is the difference between private pension vs a PRSA ? Or are they both the same thing. Also if i go with my employers private pension offering and if i leave the job i might not have access to it so holding it back to opening a PRSA account. What would you suggest ?
If your employer give you free money into the pension plan. Take it. If you leave the employer you can normally either bring the accumulated funds with you to a new employer or a Personal pension product or else leave it grow and access it from 50 years of age. Both options depend on individual plan rules but don’t miss out on an employer contribution and likely lower fees than a personal pension could offer.
Great video man! Do you by chance know if the state matches private pension contributions for public servants? I am joining the civil service this summer and it's difficult to find a coherent answer to this online. Cheers bud :)
How much is the transfer cost of, let say 10000 from AIB or BOI to Trade Republic? I guess it is in Germany. How do you do transfers in a cost efficient manner?
If you plan to work until you reach 40years service you will get a better pension than 99% of people. If you want to retire early or have spare money then an AVC is worth considering.
Great video Dan, thank you as always! :) I have been reading and looking for more information thanks to your videos that caught me investing :) I wanted to know what you think about the "BED AND BREAKFAST" sale strategy to try and maximise our use of capital gains exemptions on stocks etc given the irish tax law. Thanks again♥
Hi Thanks for your videos they are great. Q If you earn a relatively low income say 30,000 would it be better to invest your money in the likes of ETFs compared to private pension as you cant really avail of the tax benefits a higher earner could and the EFT would be worth more by the time you come to retirement? Thanks
Interested in an answer to this question. I'm a (40yo) standard rate earner and currently pay 25% of my salary into pension and AVC. It's a return of 25% immediately due to tax savings. I'd be willing to change over if your question was answered and it looked like the better option
I am 45 and a higher rate PAYE tax payer . Is there any benifit in paying more than 25% of my salary into my pension . As I won’t get any further tax relief and will ultimately be paying the higher rate at drawdown , I can’t see any benifit in paying more than 25% . Am I missing anything
Regarding the mandatory 8 year capital gains rule, what happens if I am a tax resident in another country during that year? I have maybe 150k in index funds and coming up on the eighth year. Part of me is considering moving somewhere else for 180 days.
You can take 200k tax free and a further 300k at 20% (I think), then manage your pension payments to keep yourself under the higher rate of tax. Simples.
@@weeeeehhhhh you can take 200k gratuity payment tax free. But your pension is taxed just like normal income. So any amount of your pension above 42k will be taxed at 40% and dey will take prsi and usc too
@@CKen1991 and a lump sum of 300k at 20%. Your living expenses when retired should be much less than today. Mortgage paid off, children out of the house, plenty of other investments and cash on hand so you don't need to exceed the 42k cap if you can help it. Bear in mind all this is subject to change over the next few decades. I'm a long time from retirement
@@CKen1991 so you're saying taking 500k in salary during you're working life and paying 250k tax/prsi, is no worse than taking a 500k lump sum on retirement and paying 60k tax. Okay.......
I see no value whatsoever in putting your money in a pension until you hit 60. Having your money locked away for potentially 30 years in a pension is awful idea. Not to mention the money could get "lost" or you could get hit by a bus the next day and never see it.
High Interest Savings Accounts 💰
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This might be a nieve question -
can you setup a retirement account via trade republic or any of these platforms? it feels like the pension account is hidden behind pre PAYE and is somewhat limited in options (i get that its great to have employer contributions and that it isnt taxed as much on entry. )
but if we could all have a second retirements account that allowed us more control and allows us invest with long term in mind on these platforms that would definitely be attractive.
just a thought.
Thank for the video Malone, can I suggest topic for the new video. Pension and how to actually invest since I found it pretty interesting when I started my pension investing journey and I chose Davy Select where I can decide where I want to invest, it would be awesome if you do comparison of Davy, Zurich, Irish Life etc... how much it cost etc...
Hello! Thanks for the content, really helpful. The main thing that it's still stopping me from investing (apart from my corporate RSU and EPP) is the tax implications, especially taxes on interests and ETF. I think that a video with guidelines about how to handle the tax aspects would be very useful, maybe specifying when paying an accountant is the best option. Any link to a document, video or book would be great as well. Thanks again for all your amazing work.
Same here, but Irish government just came out and declared that changing tax on stocks will NOT increase amount of people investing , useless as usual
They are parasites they really are@@googler38
Thanks for the video Malone from a foreign European expat living in Ireland. For us a diverse community is essential for our future know how the Irish system works. 👏👏👏👏
Thanks for the excellent video with so much detailed info.
Would you make a video related to self administered pensions? Also, the best method to take funds from your Limited company i.e. employee salary, invoicing the company as a sole trader etc.?
Have to disagree with the maxing pension as the starting point. No point having tens or hundreds of thousands of euro locked into a pension until your at least 50 if you don’t have an emergency fund and are still living in your parents box room (and want your own place). Makes sense on a calculator/spreadsheet but not in real day to day life. Take advantage of employer contributions as a starting point for sure though.
I’d also go with a mini-emergency fund then take on the high interest debt. Once it’s cleared go back finish off a fully funded emergency fund. Then stick it out of sight and not visible on your main banking app to reduce temptations. Most people don’t have any emergency fund so having anything puts you amongst the top of the class unfortunately.
One scenario to invest in index funds before maxing out pension contributions would be for planned or known expenses in the medium term. 5/7+ years. No point in having a big pension pot but then needing to borrow in 10 years for a new car, kids college etc.
Probably my main feedback on the video is you over looked protection polices, especially income protection. Everybody needs this if they don’t have it with an employer. Almost as important as this is life cover (not mortgage protection) if you have dependants and especially if you have kids and/or you have the only household income.
agree on pension investments being a good way to invest for the long term while saving on taxes.
However, investment choices tend to be limited when it comes to pension plans. In most (perhaps all) cases I have found, they're limited to actively managed funds, which are much more expensive and as research has shown fail to beat the return from passively managed funds.
And the AMC is quite high for pension plans at 1.5% or higher. These high fees compound to astronomical numbers after 20-30 years or more, which is a very common timeframe for lifetime investments.
In comparison, investing post-tax in index funds offers choices with fees as low as 0.1%
The ideal would be having the option to invest pre-tax in very low cost index funds. If anyone knows how this is possible, please let me know, I haven't been able to find any 🙏
Your want does not exist in Ireland. An employer pension investment options might well be limited but if so make HR aware and see if more options can be added. Fees are also normally lower on group schemes than personal pensions and again raise it with HR to see if your employers plan is competitive. Do the fees in an employer plan offset the 67% instant return made via tax relief? Some company pensions can have passive index funds and have fees as low as 0.10% it might just need some push from employees to get HR to take notice.
Thanks for the advice - set up a TR saving acc - 4% interest happy days!
Thanks for your video. How are returns on foreign government/corporation bonds taxed in Ireland?
would you prioritize pension over getting on the property ladder?
Good man Dan, good to see you back, thank you.👍🏼
I was waiting for that, Thanks
Sage advice Malone. Only one observation. If you intend to reach financial independence before the retirement age (i.e. 66), you'll need a decent private investment fund to fund the gap. In this case something like a 60/40 split (pension/private investment) would be a good balance.
Another fantastic video. With someone with a TR account. I would love a video regarding tax implications (i.e DIRT etc) Thanks and keep up the work!!
Pension funds in ireland are not insured with the deposits guarantee scheme, although highly unlikely but if the likes of new ireland or zurich go bust u will lose every single penny. Thought that shiuld of been mentioned
Hi Dan. Thanks for the video. I am wondering about the exit tax on index funds. I have bought some index funds on trade republic and I have a recurring transaction for trading 212. Obviously the recurring one (which is monthly) would mean that in 8 years’ time, I will have to pay the exit tax every month, which seems like a bit of a pain. Can you provide me more details about this please?
Great content as always.
You are a Genius!!!
Thank you for the videos, would you recommend a financial advisor for a 25 year old that is making above average salary?
Thanks. I do not understand why the emergency fund should not be "invested" partially or totally in an instant access saving account. For some of us especially with kids emergency funds is quite significant, it's essential to protect it against inflation.
I’d put it into Trade Republic. Instant access and 4% Gross before DIRT. Fully protected. No brainer.
@@MrBucko1990 can trade republic adjust the interest any time? Inflation is dropping in many countries in Europe, so i am not sure what will happen during the next 12 months. That's why I decided for BOI supersaver 3% fixed on 30k max, u can open up to 2 of them. Not great, not terrible, they pay dirt for you.
@@locusta1280 you should not put an emergency fund into fixed account unless you then tell when an emergency will happen? I would be more concerned about ensuring instant access for an emergency fund rather than the interest rate being earned. If that means it earns 0% so be it, the access is the key. Yes Trade Republic can adjust at any time but so can BOI or anyone else. Unless it’s a fixed term account but again an emergency fund shouldn’t be in a fixed term account. Anything in excess of an emergency fund is an altogether separate matter.
If you have non earned income, do you recommend putting some in a pension with no tax incentives?
Great and very informative video Malone!
Would you suggest any particular pension company over it's competitors? Or do the laws around pension schemes make it so there's no best option?
Thanks for the video - very informative. Can you explain the part where you say a 40% tax saving is equivalent to a 67% ROI?
This is to do that all that 40% you dont pay in tax goes into your pension fund (and maybe employer adds/ or that pension fund gives you over time profit)
What will/do you do when your etf investments reach 8 years. Do you sell and pay the tax or pay the tax with money earned from income?
Very good Malone, thanks for that!
Great content Dan, ty
What rate would be considered "high interest"? How about a 7% secured loan with a credit union?
@2:35 Everyone should be aware of having the dangers of having thier funds invested in the 'default plan.'
Amen 🙏
What about the situation where the only accepted pay method is a credit-card? In the Netherlands, ideal is the standard but for ordering from foreign countries i need either PayPal or a credit-card.
On holidays, i use my credit-card as it has better conditions than using my Dutch debit card. Cash is king but when using my credit-card the conversion is better then the one offered on my debit card.
I build my pension via my employer. In the Netherlands, we also get a government pension. I think it won't be available for me when it is my turn. That is the reason i started investing in my ETF's portfolio.
I could do it with tax credits but as i want to have full control i do it without tax credits.
With your net payment in, pay yourself first. I put 5% away to my saving account and 7.5% to my ETF's investment account.
Thanks very much Dan, great info as usual 👍. Nice tash 😉.
Great video again Dan 👏 Thank you. 😊 Can i ask what is the difference between private pension vs a PRSA ? Or are they both the same thing.
Also if i go with my employers private pension offering and if i leave the job i might not have access to it so holding it back to opening a PRSA account. What would you suggest ?
If your employer give you free money into the pension plan. Take it. If you leave the employer you can normally either bring the accumulated funds with you to a new employer or a Personal pension product or else leave it grow and access it from 50 years of age. Both options depend on individual plan rules but don’t miss out on an employer contribution and likely lower fees than a personal pension could offer.
@@MrBucko1990 thank you. Wish I had known this sooner but I guess its never too late to start with a pension plan. Much appreciated
Hi Dan
Are you using Trinx options as a platform for copy trading ?
Great video man! Do you by chance know if the state matches private pension contributions for public servants? I am joining the civil service this summer and it's difficult to find a coherent answer to this online. Cheers bud :)
Great video thank you
How much is the transfer cost of, let say 10000 from AIB or BOI to Trade Republic? I guess it is in Germany. How do you do transfers in a cost efficient manner?
Thanks so much for this video. I was wondering if you think the private pension is necessary for a teacher or civil servant in Ireland as well?
If you plan to work until you reach 40years service you will get a better pension than 99% of people. If you want to retire early or have spare money then an AVC is worth considering.
Great video Dan, thank you as always! :)
I have been reading and looking for more information thanks to your videos that caught me investing :)
I wanted to know what you think about the "BED AND BREAKFAST" sale strategy to try and maximise our use of capital gains exemptions on stocks etc given the irish tax law.
Thanks again♥
Hi Thanks for your videos they are great. Q If you earn a relatively low income say 30,000 would it be better to invest your money in the likes of ETFs compared to private pension as you cant really avail of the tax benefits a higher earner could and the EFT would be worth more by the time you come to retirement? Thanks
Interested in an answer to this question. I'm a (40yo) standard rate earner and currently pay 25% of my salary into pension and AVC. It's a return of 25% immediately due to tax savings. I'd be willing to change over if your question was answered and it looked like the better option
I am 45 and a higher rate PAYE tax payer . Is there any benifit in paying more than 25% of my salary into my pension . As I won’t get any further tax relief and will ultimately be paying the higher rate at drawdown , I can’t see any benifit in paying more than 25% . Am I missing anything
You accent is extremely similar to Keith Barry’s.
Regarding the mandatory 8 year capital gains rule, what happens if I am a tax resident in another country during that year?
I have maybe 150k in index funds and coming up on the eighth year. Part of me is considering moving somewhere else for 180 days.
I'm defo not a tax expert but it couldn't be that easy to dodge it surely
I think you're liable for Irish tax for three years after you leave.
honestly i wish i had found you soooooner.
Why do people say mortgage is low interest loan. 5.6% mortgage and more than 50% of my payments are interest. Mortgage is a con.
If I contribute 500 euros from my net pay to my pension, is the 20% that was deducted previously refunded?
Yes. Pension not paid at source is claimed by you from Revenue
Trading 212 will offer money market account in January 2024. What do you think?
Trade republic has no customer support. Beware
You save 40% tax and den dey will tax ur pension at 40% when u take it out,
You can take 200k tax free and a further 300k at 20% (I think), then manage your pension payments to keep yourself under the higher rate of tax.
Simples.
@@weeeeehhhhh you can take 200k gratuity payment tax free. But your pension is taxed just like normal income. So any amount of your pension above 42k will be taxed at 40% and dey will take prsi and usc too
@@CKen1991 and a lump sum of 300k at 20%.
Your living expenses when retired should be much less than today. Mortgage paid off, children out of the house, plenty of other investments and cash on hand so you don't need to exceed the 42k cap if you can help it.
Bear in mind all this is subject to change over the next few decades. I'm a long time from retirement
@@weeeeehhhhh if your fund is too large you can divert some to your wife husband and they can take out tax free lump sum too .
@@CKen1991 so you're saying taking 500k in salary during you're working life and paying 250k tax/prsi, is no worse than taking a 500k lump sum on retirement and paying 60k tax.
Okay.......
All fun and games until the private pension firm goes bankrupt
I see no value whatsoever in putting your money in a pension until you hit 60. Having your money locked away for potentially 30 years in a pension is awful idea. Not to mention the money could get "lost" or you could get hit by a bus the next day and never see it.
That's what I'm scared of